Effects of regulations on technical efficiency of US baitfish and sportfish producers

The stringency of the regulatory environment has been shown to negatively affect the growth of aquaculture. A technical efficiency analysis of baitfish/sportfish production in the United States was performed using a stochastic production frontier model and a jointly estimated maximum-likelihood procedure (Frontier 4.1). Determinants of inefficiency were assessed for their relationship to farm efficiency. Mean technical efficiency for U.S. baitfish and sportfish producers was found to be 77%. Several regulatory variables were found to be significant in explaining the variation in levels of efficiency, including the number of annual renewals of permits and licenses and the amount of manpower required to comply with regulations. Results support the hypothesis that the current regulatory environment in the United States has reduced efficiency and economic competitiveness of baitfish and sportfish producers.